What is a Point-of-Service Plan (POS)?

A point-of-service plan (POS) is a type of managed-care health insurance plan that provides different benefits depending on whether the policyholder uses in-network or out-of-network health care providers. A POS plan combines the features of the two most common health insurance plans: the health maintenance organization (HMO) and the preferred provider organization (PPO). Point-of-service plans represent a small share of the health insurance market. Most policyholders have either HMO or PPO plans.

How a Point-of-Service Plan (POS) Works

A point-of-service plan is similar to an HMO. It requires the policyholder to choose an in-network primary care doctor and obtain referrals from that doctor if they want the policy to cover a specialist's services. And a POS plan is like a PPO in that it still provides coverage for out-of-network services, but the policyholder will have to pay more than if they used in-network services.

  • Point-of-service (POS) plans usually offer lower costs, but their list of providers may be limited.
  • POS plans are similar to HMOs, but POS plans allow customers to see out-of-network providers. 
  • A POS policyholder is responsible for filing all the paperwork when they visit an out-of-network provider.

However, the POS plan will pay more toward an out-of-network service if the primary care physician makes a referral, compared with if the policyholder goes outside the network without a referral. The premiums for a POS plan fall between the lower premiums offered by an HMO and the higher premiums of a PPO.

POS plans require the policyholder to make co-payments, but in-network co-payments are often just $10 to $25 per appointment. POS plans also do not have deductibles for in-network services, which is a significant advantage over PPOs.

Point-of-service plans often cost less than other policies, but savings may be limited to visits with in-network providers.

POS plans offer nationwide coverage, which benefits patients who travel frequently. A disadvantage is that out-of-network deductibles tend to be high for POS plans. When a deductible is high, it means patients who use out-of-network services will pay the full cost of care until they reach the plan's deductible. A patient who never uses a POS plan's out-of-network services would probably be better off with an HMO because of its lower premiums.

Disadvantages of Point-of-Service Plans

Though POS plans combine the best features of HMOs and PPOs, they hold a relatively small market share. One reason may be that POS plans are marketed less aggressively than other plans. Pricing also might be an issue. Though POS plans can be up to 50% cheaper than PPOs, premiums can cost as much as 50% more than for HMOs.

While POS plans are cheaper than PPOs, plan details can be challenging, the policies can be confusing, and many consumers don't understand how the associated costs work. Read the plan documents especially carefully—and compare them to other choices—before deciding whether this is the best option.